Problem_Set_2

Problem_Set_2 - which will depend solely upon K and K ....

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Economic Growth and Development Professor Olivier de La Grandville Fall 2008 Problem Set 2 To be returned Wednesday, October 15 th , 2008 * 1. Very often (in fact always) the literature on growth refers to so-called “unstable” equilibrium points(at such points the function sf ( r ) would be such that sf 0 ( r ) > n ). Why are such occurrences impossible? 2. Why is 1+ ih an excellent approximation of (1+ i ) h ? Under which conditions? Give an example of your choice. 3. Derive the rule of optimal economic growth by using a modified Hamiltonian(a Dorfmanian)
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Unformatted text preview: which will depend solely upon K and K . Also, suppose that the rate of preference for the present is a function of time z ; i = i ( z ). * You may submit this problem set at the beginning of the class or in Jihees oce Terman 490 by 2:15pm. SCPD students please use the usual SCPD channels. If other students require email submission in special circumstances, please rst email Jihee at jiheekim@stanford.edu....
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